Fu r m a n C e n t e r f or real estate & urban policy

N e w Y o r k U n i v e r s i t y 2 0 0 8 m a r c h

school of law • wagner school of public service

housing Policy Brief

The Effects of Inclusionary on Local Housing Markets: Lessons from the , Washington DC and Suburban Boston Areas Inclusionary zoning (IZ) is an tool that links the pro- duction of affordable housing to the production of market-rate housing. IZ policies either require or encourage new residential developments to make a certain percentage of the housing units affordable to low- or moderate- income residents. In exchange, many IZ programs provide cost offsets to developers, such as density bonuses that allow the developer to build more units than conventional zoning would allow, or fast-track permitting that allows developers to build more quickly.

There is tremendous diversity in the structure and goals of inclusionary zon- ing programs throughout the country: some IZ programs are voluntary while www.nhc.org/housing/chp-index

■ others are mandatory; they are triggered by different sizes and types of mar- ket-rate developments; they target the affordable units to different income levels; they have different rules about whether the affordable units must be located within the market-rate development or may be located off-site; and they impose the affordability restriction for different lengths of time.

Since the first program was established in 1972, the number of jurisdictions that have adopted inclusionary zoning policies has grown steadily, with a sig- nificant number of jurisdictions adopting programs in the last decade. While urmancenter.nyu.edu

f it is difficult to identify an exact number, well over 300 jurisdictions – cities, towns and counties – have an inclusionary zoning ordinance on the books. w w w . The Effects of Inclusionary Zoning on Local Housing Markets: 2 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 1 Arguments For Not all IZ programs require the affordable units to be produced on-site; some allow developers to build the affordable and Against IZ and Against ept, r ehp bcue f te rapid the of, because perhaps or Despite, Z rgas il as te rcs f mar of prices the cause will programs IZ ht eeoes a rcu ls profits lost through incentives recoup such as density bonuses. can developers that rtc, n h ohr ad age ht IZ that argue hand, other the on Critics, require affordable and requiremarket-rateaffordable to and units affordable housing wherever it chooses. units elsewhere in the community, and some allow developers to pay an in-lieu fee that the jurisdiction can use to build n uidcin ta dnt eur develop require don’t that jurisdictions in instead build to developers causing by ing money on the affordablethemoneyon units, believe they is considered more fiscally sustainable.fiscally considered Promoreis in evolution important an as heralded is ain I porm otn eeae sig generate nificant controversy. supporters, IZ Among often programs IZ nation, programs, particularly mandatory ones, will ponentsrecognize thatdevelopers maylose oet as age ht Z rgas that programs IZ that argue also ponents eo-akt ees B cntann the constraining By levels. below-market be located in the same development promote ket-rate housing in the jurisdiction to rise, to jurisdiction the in housingket-rate es iet ulc usd ta traditional than subsidy public direct less affordable housing programs, therefore and affordable housing policy because it requires ers to sell or rent a portion of the units at units the of portion a rent or sell to ers constrictdevelopment market-rateof hous economicracialandintegration. upy f osn, h agmn follows, argument the housing, of supply ped f nlsoay oig cos the across zoning inclusionary of spread Poinsettia Station, Carlsbad,BRIDGE Housing. CA, 1 While proWhile

------What Do We Know About the Impacts viding affordable units on the developers the on units affordable viding n pt o is ouaiy mn housing among popularity its of spite In It is difficult to obtain accurate data on the obtain on accurate data difficult to is It IZ programs had the effect of restricting the have First, questions. empirical two are IZ the whole community ought to pay for it. is unfair to place the entire burden of pro of burden entire the place to unfair is few researchers have tried to answer these answer to tried researchershave few ing its costs in the jurisdictions adopting IZ? ing policies. At the center of the debate over units; to the extent the community believes increasing than rather reducing ultimately producing affordable units? Unfortunately, units? affordable producing Second, have IZ programs been successful at have been completed suffer from signifi from suffer completed been have little about the effects of inclusionary zon inclusionary of effects the about little affordable housing is an important good, important an is housing affordable and purchasers of new market-rate housing it that argue also affordability.Opponents doae ad oiyaes n steady and policymakers and advocates usin, n mn o te tde that studies the of many and questions, relativelyknow we critics, fromopposition at aa n mtoooia limitations. methodological and data cant supply of market-rate housing and increas and market-ratehousing of supply of IZPrograms?

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The Effects of Inclusionary Zoning on Local Housing Markets: 3 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 3 2 To answer these questions, we selected three eonzn te ed o ojcie rigor objective, for need the Recognizing Housing Policy asked NYU’s Furman Center our study because Boston has different authority over regulations than other jurisdictions in the state. http://furmancenter.nyu.edu/publications/index.html or http://www.nhc.org/housing/iz. we studied. In particular,numbersmallstudied.Inthe we for which the data about housing supply and well-documented, and and prevalent fairly metropolitan areas in which IZ programs are ein Dsie hs calne, u find our challenges, these Despite region. region.Due to data constraints, we were not from conductingfromstatistical thatanalysis on forRealEstate and Urban Policy to conduct prices are available: the San Franciscoarea, San available: theare prices important implicationsadvocates,importantcritthat c, n jrsitos osdrn adopting considering jurisdictions and ics, ingssignificantly advance the current under primary questions:primary produced under these programs. an IZ program should bear in mind. answer definitively and completely to able n ndph lniuia aayi o the of analysis longitudinal in-depth, an for Center the IZ, about debate policy and adoption and characteristics of inclusionary oig rgas cos uidcin and jurisdictions across programs zoning While While the City of Boston has an IZ program, it was not included in the database that forms the basis of This policy brief presents a ofsummary our findings; the entire study can be foundat: of jurisdictions in the D.C. area prevented us u aayi t hl ifr te academic the inform help to analysis ous over time, and to track the number of units each of these questions for each of the regions effects of IZ. of effects suburbanBoston, standing of the effects of IZ policies and have 1) 3) 2)

H What effects has has effects What What kinds of jurisdictions have jurisdictions of kinds What rate housing? rate market- of production and price influenced production levels? production influenced have factors programs, what and adopted adopted has been produced in different in produced been has ow much affordable housing housing affordable much ow 2 Our researchOur addresses three I Z? 3 andtheWashington D.C. I Z had on the the on had Z

I Z

- - - - Variation Among The IZ programs in our three study areas study three our in programs IZ The The design inclusionaryof zoning programs Table A illustrates significant differences significant illustrates A Table and Regions IZ Programs variation reflects a number of key differences varies tremendously across jurisdictions. This were not able to evaluate the impacts of the with maximizing the number of affordableof number themaximizing with than the programs in suburban Boston. to different types and sizes of developments these statistics reflect thedata we used in our through IZ while others are more concerned reflect this diversity. Table A provides an provides A Table diversity. this reflect regulatory larger the differences in reflects mandatory, and are more broadly applicable most recently adopted IZ policies. we impact, an haveto time some take may jurisdictionswork:thewhich framework in ing the composition of their population and rgas n h Sn rnic ae were area Francisco San the in programs programstheseregions.inPleasenote that priority on achieving economic integrationeconomicachieving on priority housing units produced. The diversity also diversity The produced. units housing housing stock and their political goals. For goals.political their and stockhousing legislation, while others are more restrictive able from each region. Because IZ programs among the programs in our study areas. IZ areas.study our inprograms the among jurisdictionsthemselves,theincludamong salse erir ae oe iey o be to likely more are earlier, established IZ the of elements key some of overview of local controls. use land of formsnew enact freedomto of xml, oe uidcin pae higher a place jurisdictions some example, study; more recent data may now be avail be now may data recent more study; some states allow jurisdictions a great dealgreat jurisdictions aallow states some - - The Effects of Inclusionary Zoning on Local Housing Markets: 4 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 4 In order to assess the impacts of IZ on housing prices and permits, our study used data on IZ programs in the San Francisco area as of 2004. According to NPH (2007), there are now 77 jurisdictions in the San Francisco area with IZ. Table A: Among Variation adopted prior to 2000. See reference list for full citations. and suburban Boston cover programs enacted through 2004, and data for the Washington D.C. area include programs newer programs that have not existed long enough to produce measurable results. Data for the San Francisco region the content of IZ programs varies greatly, the data across jurisdictions are not always comparable. Our analysis excludes the Furman Center in June, 2007. Because each of these data sources used a different methodology survey and because Database (2007); NPH (2007); and a supplemental telephone of survey the San Francisco and D.C. areas, conducted by InstituteRappaport for Greater Boston Local Housing Regulation Database (2004); CCRH Inclusionary Housing Policy NPH (2003); Fox & Rose (2003); Vandell (2003), adapted from Rusk (2003); Pioneer Institute for Public Policy and the Source: This table combinesdata from various sources, including: Calavita & Grimes (1998); Brown (2001); CCRH and remain affordable remain H units affordable I Range Median affordable be must that units of % units building of lieu in fees pay to developers allowing programs of % bonus density providing programs of % developments of sizes and types different to applicability of Breadth mandatory are that programs of % Range Median adopted: was Y adopting) jurisdictions all of (# of Prevalence ncomes targeted for targeted ncomes ear program program ear ow long units must must units long ow I Z

I Z Programs in in Programs Z S 45 yrs. affordabilityof is length The median Very low to moderate 5-25% 15% 86% 67% Broad 93% 1973-2004 1992 48/104 cities/towns 7/10 counties

2004) of (as an an F rancisco Area rancisco

O ur Three ur Three 4 s

S specify. don’t half ability; affordpermanent ‑ programs require the of One-third to moderateLow 5-60% 10% 38% 71% Narrow 58% 1972-2004 2001 99/187 cities/towns (as of 2004) of (as tudy Areas tudy uburban Boston uburban

Area Area Washington D. Washington is 5-20. is range renters for years; 5-15 from is range owners, For moderate to Low 6.25-15% 8.13% 100% 100% Broad Fairly 80% 1974-1996 1992 counties 5/23 (as of 2000) of (as C .

The Effects of Inclusionary Zoning on Local Housing Markets: 5 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 5 Because of the small number of jurisdictions in the Washington D.C. area with IZ, we were unable to perform a regres TabledoesAnotreveal thecomplicated reg rgas n h Sn rnic ae also area Francisco San the in Programs .. ein porm rqie h units the require programs region, D.C. n ahntn .. ms porm are programs most D.C., Washington In IZ takes, and the ultimate impacts of an IZ an ofultimate impactsthe and takes, IZ wide affordable housing policies. Similarly, local grants example, For ways. the Washington D.C. area, as well as findings on IZ production and other observations on the effects of IZ in this area. San Francisco and suburban Boston areas. However, the full report contains detailed information on IZ programs in sion analysis for this region. Accordingly, most of the findings summarized in this brief are based only ondata from the than the broader set of developments sub developments of set broader the than to this variation across regions, there is also in than time less for affordable remain to ject to IZ in the San Francisco area. In the In area.Francisco San the in IZ to ject ahr hn ulig h uis themselves. units the building than rather regions operate, which may affect the likelioperate,affect regionsthe maywhich may enhance or impede the formation andformation the impede orenhance may td ny o agr eeomns rather developments, larger to only ited lim are requirements the but mandatory, fees in-lieu paying by requirements isfy ulatory structure within which each of these programs within each region. policy. State or regional regulatory regimes regulatoryregionalpolicy. or State hood of adoption of IZ, the form in which in form the IZ, of adoption of hood r mr lkl t alw eeoes o sat to developers allow to likely more are governments broad authority over land use eiin bt lo a a ubr f state- of number a has also but decisions either of the other study areas. In addition In areas.study other the of either successlocalprogramsofIZ numberain of significant variation in the structure of IZ of structure the in variation significant Photo: Courtney Wolf. Participants and Dunn Development Corp. Palmer’s Dock, Brooklyn, NY, L&M Equity

- - - - - Their Housing Which Jurisdictions How Does it Affect Adopt IZ and Markets? Francisco area and suburban Boston helps Boston suburban and area Francisco has a strong tradition of local Z Fr xml, n uubn otn we Boston, suburban in example, For IZ. hc rqie cte t poie expedited provide to cities requires which What kinds of jurisdictions adopt adopt jurisdictions of kinds What tions with IZ also are more likely to adopt to likely more are also IZ with tions is ht rdc wehr jrsito is jurisdiction a whether predict that tics to be a sufficient mechanism for producing mechanismsufficient for a be to Some IZ. adopt to has jurisdiction a tives uidcin i te ae ony ih IZ with county same the in jurisdictions role in jurisdictions’ decisions to adopt IZ. Our analysis of jurisdictions in the San San the in jurisdictions of analysis Our Our study was unable to unpackunablecomtothesestudywas Our 40B find mayothers while 40B, torespond find that the probability of adopting an IZ an adopting of probability the that find is worth noting that state regulations play regulations state that noting worth is ments that set aside a specified percentagespecified a aside set that ments not counties) have a tremendous amount of ingly think they do not need an IZ program. them help to IZ adopt may s nesad oe f h characteris the of some understand us program increases as the number of other other of number the as increases program lctd netvs n cntans bt it but constraints, and incentives plicated develop to benefits other and permitting likely to adopt an IZ program. likely to adopt IZ. larger, more are affluentmore jurisdictions authority over land use decisions. The Mas decisions.The use landover authority a significant and somewhat unpredictable somewhat and significant a affordable housing on its own, and accord and own, its on housing affordable of affordable units, complicates the incen the complicates units, affordable of sachusettsstate law knownChapter as 40B, (but cities and towns andself-governance,

Those near other jurisdic Those near 5

We find that

I Z?

------The Effects of Inclusionary Zoning on Local Housing Markets: 6 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 6 Cluster zoning provisions allow developers more flexibility than conventional zoning allows, such as reductions in the Z rgas eas o a eie o satisfy to desire a of because programs IZ ton, we find that jurisdictions with growth growth with jurisdictions that find we ton, there is a “bandwagon” effect for promising that or neighbors, their of experiences the than out of a desire to adopt a progressivea adopt todesire a of out than jurisdictionsadoptsome that revealed tors jurisdictions already have programin jurisdictions IZ an u itriw wt porm administra program with interviews Our management policies and cluster zoning zoning cluster and policies management from learn jurisdictions that indicate may increases. This makes sense; if neighboring neighboring if sense; makes This increases. motivesmay impact theamount ofhousing place, it may be less likely that IZ will scare will IZ that likely less maybe it place, that those communities are concerned both with the pace of residential growth and pressures on housing affordability. IZ programs among jurisdictions with growth management policies, such as annual caps on building permits, may suggest allowable units in return for producing affordable housing (or some other form of community benefit). The prevalence of suburban Boston IZ programs are designed as part of cluster zoning, allowing developers to receive increases in the total minimum lot size or other dimensional requirements, in exchange for setting aside protected open space. Many of the are more likely to adopt IZ. affordable housing policy. These differing These policy. housing affordable or trendy policies. Finally,trendy or policies. Bos suburban in development to other locations. It also also It locations. other to development tt rgltos r xettos rather expectations, or regulations state Jurisdictions are more likely Are larger and more affluent use regulations (specifically jurisdictions that have IZ Have adopted other land cluster zoning or growth Have more neighboring to adopt an IZ program Key fin Key iZ iZ management) when they: ad d o n n ings on on ings pt

ion 6

- - hl nal al Z rgas n h San the in programs IZ all nearly While We find that strongestthe predictor how of We also find evidence that programs in the in programs that evidence find We also rnic ae hv poue sm afford some produced have area Francisco What influences how much affordable much how influences What rte, mlmne o efre i a dif a in enforced or implementedwritten, hn ta cmuiis ht dpe IZ adopted that communities that think ht uidcin i te otn ra have area Boston the in jurisdictions that rge te Z rga ae iey o take to likely are program IZ the trigger makes This place. in been hasprogram the be mayrequirements, externalit satisfy to merely to satisfy a statemandatemerelysatisfyhaveamayto ferent way than if it resulted from more local flexible programs may result in greater in result may programs flexible oe aiir ih h porm n work and program the with familiar more IZ jurisdiction’s a units affordable many new IZ units, developers and administrators units have been produced. This may indicate producingaffordable creathousing, such as become to time some need undoubtedly political pressure. Specifically, one might one Specifically, pressure. political rdc mr uis idctn ta more that indicating units, more produce projects or provide density bonuses tend to production. programproducedhas timelengththeofis solelyadopted is program the If produced. a Facso ein ht xmt smaller exempt that region Francisco San books have not produced any units, and over be needed to test this hypothesis. adopted IZ programs for reasons other than adopted policies that are less effective or less ableunits,jurisdictionsthesomeof43% in able units through IZ adds up over time. housing has been produced under under produced been has housing n-hr ae nbe o eot o many how report to unable are one-third outanykinks,and theproduction affordof carefullycrafted;additionalresearchwould suburban Boston with an IZ program on the several years to be completed and generatecompletedandbe toseveralyears sensefor anumber of reasons: projects that I Z? Z? - - - -

The Effects of Inclusionary Zoning on Local Housing Markets: 7 Lessons from the San Francisco, Washington DC and Suburban Boston Areas the fact that IZ programs are a relatively new the Boston-area programs are voluntary and of many that be could production low the ing a mechanism to satisfy the requirements phenomenon in the region, and these juristheseand region, thephenomenon in programs to scale. Another explanationforAnotherscale. toprograms apply to a narrow range of developments. of state law 40B. It also may be a function of dictions simply have not yet brought their brought yet not have simplydictions n

The median annual production across all programs is 9 affordable units/year n

adopted one of the first IZ programs in the country, dating back to 1974. Nearly three-quarters of the units come from Montgomery County which n n have produced relatively few affordable units, probably in part because

Precise counts are not available, that but surveys suggest IZ programs Almost all jurisdictions report having produced some affordable units. Trends in California Inclusionary Housing Programs so many IZ programs in the area were enacted relatively recently In the Washington D.C. area, IZ programs have produced * Updated production numbers are available in NPH’s 2007 report, n

smaller projects have produced more affordable units. For awhole, the as region IZprograms have produced n

Programs with density bonuses and exemptions for n a total of 15,252 affordable units (as of 2003). the more affordable units they have produced

As of 2004,As 43% of jurisdictions with IZ had not Key Key The longer IZ programs have been in place, 9,154 affordableof 2004).* (as units F in produced any affordable units. In the San Francisco area: d In suburban Boston: ings on on ings - n n n available at: http://www.nonprofithousing.org/.

I The final question we try to answer is the is answer to try we question final The What effects have effects What the issues surrounding the debate over IZ: over debate the surrounding issues the most important, and the most difficult, of difficult, most the and important, most model to predict developers’ behavior. understanding of the underlying issues, it is how do IZ programs impact housing priceshousing impactprograms IZ do how helpful to consider a simplified theoreticalsimplified a consider to helpful h pie n pouto o market- housing? rate of production and price the n pouto? n re t gt better a get to order In production? and Z Pro Z d uc AffordableChoice:by t ion ion

I Z programs had on on had programs Z

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. The Effects of Inclusionary Zoning on Local Housing Markets: 8 Lessons from the San Francisco, Washington DC and Suburban Boston Areas 8 7 Third, they may lower the prices they are they prices the lower may they Third, The amount of revenue a developer can gain Previousstudies have triedtotest these the willing to pay for land. Their ability to do any theprices they charge for market-rate units. raisingrevenueslostby the up maketo try the IZ requirements, the dynamics of housrequirements,dynamicsofIZ thethe offsets programs cost offer IZ thewhich to that developers are likely to react in a num a reactdevelopersinthat likelytoare ersin nlss ehius o isolate to techniques analysis regression of total permits, and between 50 and 90 percent of jurisdictions in our sample issued no permits for multifamily housing. in all three areas during the period from 1980 to 2005. In any given year, single-family permits average over 90 percent methodologies and data used in those studies may build or invest in other jurisdictions that ing supply and demand, the extent to which market factors, but under each scenario, the models predict that the size of the impact on pn ay atr, nldn te extent the including factors, many upon units produced in the area falls, and demand unit, so unless developers can offset these offset candevelopers unless so unit, programspricesonproduction,and thebut production of housing in the jurisdictiontheis productionhousingin of y eln o rnig ui rqie t be to required unit a renting or selling by ber of ways to mandatory IZ programsmandatorywaystoIZof thatber housing production and prices will depend will prices productionand housing housing prices will likely increase due to the likely to fall. If the number of new housingnew ofnumber the If fall.likelyto law of supply and demand. The theoreticalThe demand. and supply of law losses, IZ programs may cause developers to are widely questioned. juris neighboring which to extent the and adopted in the community and broader area, n ohr akt atr rmi constant, remain factors market other and ally lower than the costs of developingcostsof thethatlowerthanally affordable by a mandatory IZ policy is gener oretical models and gauge the impact of IZ ofimpact thegauge oreticalandmodels othertypes supplyof constraints have been of these options will depend on a number of dictions have adopted IZ. havenotdoprograms. IZ Second, theymay developers’ revenue losses. First, developers do not provide meaningful benefits to offset earn lower profits. Economic models predict such as density bonuses, the stringency of stringency the bonuses,density as such We chose to use single-family permits because they make up the overwhelming majority of all housing permits issued Previous studies include Powell and Stringham (2004a) and Powell and Stringham (2004b); for critiques of those studies, see, e.g., Basolo and Calavita (2004). 7 We use well-accepted - - - - - variations in the jurisdictions’ characteristics Boston IZ programs, and the estimated size the effects of IZ programs on jurisdictions’ on programs IZ of effects the ht a cnrbt t cags n housing in changes contribute to may that Our analysis finds no evidence that IZ pro IZ that evidence no finds analysis Our family houses. The number of affordable of number The houses. family including race, age and education levels. rcs r rdcin ae o market-rate of rates production or prices rcs n pouto, uh s population as such production, and prices housingmarkets. Specifically, controlwe for housing units produced under the suburban area. rm hv hd n mat n ihr the either on impact an had have grams of the programs’ impact on the supply and supply the on impactprograms’ the of duction and increased the prices of single- of prices the increased and duction some evidence that IZ has constrainedpro has IZ thatevidence some igefml hue i te a Francisco San the in houses single-family size,density, anddemographic composition, prices of single-family houses. small decreases in production IZ impacts either the prices 8 and slight increases in the In the San Francisco area, In suburbanIn Boston, however, wesee seems to have resulted in there is no evidence that Prices of M of Prices or production of single- In suburban Boston, IZ Pro Key Key I Rat Z’s Z’s family houses. d F e e uc in Impa H d t n ousing ion ion ings on on ings

c a t r on on a k n e d t

-

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price of housing are both relatively modest. These results reflect the most appropriate What are the analysis of the best available data. Because Implications for of limitations in the scope and quality of the available data, however, both the San IZ Policies? Francisco and the suburban Boston results The findings from our research suggest a should be interpreted with caution.9 number of points that policymakers should Given the variation among the programs bear in mind as they consider whether to in the two regions, it is not surprising that adopt – and if so, how to structure – inclu- our analysis of the two regions produced sionary zoning policies: different results. As we cautioned earlier, Each individual ordinance should be IZ is not a one-size-fits-all tool. Not only considered on its own merits. We found can the design and scope of a program vary tremendous variation in the details of IZ greatly, but its impacts may depend on policies from one jurisdiction to the next. many variables specific to the jurisdiction. This suggests that IZ is not a single policy The different results from the San Fran- but rather an umbrella term for describing cisco and suburban Boston analyses are an many different but related housing policies, important reminder that IZ policies come each of which may well have different effects in many shapes and sizes and need to be on the number of affordable housing units thought of as a piece of the larger regula- produced and on the price and supply of tory framework, not a stand-alone solution. market-rate homes. In light of this variation, The impact of an IZ policy may be affected broad generalizations about IZ would seem by the specific design of the IZ program to be less helpful than case-by-case analysis and the effectiveness of its cost offsets, a of particular proposals or ordinances. jurisdiction’s reliance on other affordable housing tools, its reasons for adopting IZ, Many IZ policies produce affordable the nature and strength of its housing mar- units, but IZ is not a panacea for solving ket, and the state regulatory framework in a community’s housing challenges. The which it operates. IZ policies that we examined had varied suc- cess in producing affordable units. Some

uburban Boston Areas have produced very few or no affordable S units, while others have produced thousands and

C of units, making a significant contribu- ousing Markets: H tion to the availability of affordable homes. ocal

L Even those ordinances that have produced the most affordable housing units, however, have not solved the community’s housing challenges. This suggests that communities rancisco,Washington D

F should think of IZ as one piece of a broader

an and more comprehensive housing strategy, S nclusionary Zoning on

I rather than as a stand-alone policy response.

15 Quincy, Brooklyn, NY, BFC Partners and Pratt Area Community Council. ffects of

E Photo: Courtney Wolf. essons from the L The

9 9 Please consult the full study for a discussion of the data limitations. The Effects of Inclusionary Zoning on Local Housing Markets: 10 Lessons from the San Francisco, Washington DC and Suburban Boston Areas Francisco metro area found that more flex more that found area metroFrancisco aktrt huig hud e consid be should housingmarket-rate were mandatory.were that suggest results These were nevertheless significant and could be could and significant nevertheless were il mat o te rc ad upy of supply and price the on impactstial the fact that 93 percent of those programsthose percentof 93 thatfact the or price the in increase an caused IZ that in f a euaoy lmt ta encour that climate regulatory a of) tion ter considerably. – mat inclusioneffectivethe offsets ofcost thatthedetails theofpolicies particularly– San the inprograms IZ the of analysis Our n h ohr ad w fud o evidence no found we hand, other the On be Z oiis toe ht rn density grant that those – policies IZ ible in the Boston sample were fairly small, they market-rate housing across all jurisdictions - sup and price the on impacts to lead may blt cnrbtd o o ws manifesta a was (or to contributed ibility nvtbe ucms f Z A explainedlikelyseems itpoint, nextthe morefullyin As IZ. of outcomes inevitable price increases and supply decreases of of decreases supply and increases price its reduce that housing market-rate of ply More flexible IZ policies may lead to lead may policies IZ flexible More n osdrn wehr o dp, n if adopt, and to considering whether In were – projectssmaller exempt or bonuses so how to structure, IZ policies, the poten oue ad xmt mle poet pro projects smaller exempt and bonuses housing in the San Francisco area, despite area,Francisco San the in housing larger in some communities. insome larger affordable units. The study was not able to of able not was study The affordable units. production greater a with associated dces i te upy f market-rate of supply the in decrease a analysis of IZ policies in suburban Boston Boston suburban in policies IZ of analysis aged new development. adverse price and supply effects are not are effects supply and price adverse affordability. While the average size of the of size average the While affordability. n psil epaain s ht hs flex this that is explanation possible one determine why policies that provide density duced more affordable housing units, but units, housing affordable more duced rae pouto o afral units. affordable of production greater ered. suggest that in some settings, IZ programs IZ settings, some in that suggest Both our theoretical analysis and our our and analysis theoretical our Both ------The most common compensatory benefit compensatory common most The However, our theoretical analysis suggests suggests analysis theoretical our However, mat desl te rc ad supply and price the adversely impact market cycles.market was an increase in allowabledensity.increaseinOther an was ol b fwr mat o te rc and price the on impacts fewer be would there that expect would we one, without will need to be reviewed over time to ensure with below-market units. These policies also that adverse impacts on the price and sup and price the on impacts adverse that the price and supply of market-rate housing. hm o lse ascae wt slig or selling with associated losses for them they remain meaningful and effective. under profit similar or same the realize to etn I uis t eo-akt prices. below-market at units IZ renting nldd n h I odnne w studied we ordinances IZ the in included ferent offset policies to ensure that IZ poli IZ that ensure policies to ferentoffset ply of market-rate homes can be mitigated be can market-ratehomes of ply prevented us from separately analyzing how akn rqieet (hc rdc the reduce (which requirements parking and time the decreases (which permitting affordable units should be less likely to likely less be should affordableunits other or bonuses density achievable benefits to offset the profits lost on lost profits the offset to benefits IZ policies that providemeaningfulandthat policies IZ Different cost offsets may be needed in needed be offsetsmayDifferent cost n Z oiy s ih hv be achieved been have might as policy IZ an the To unit). per needed land of amount or even avoided entirely by providing ben providing by entirely avoided even or different types of IZ ordinances impacted ordinances IZ of types different efits to developers that fully compensate fully that developers to efits opment process vary significantly from significantly vary process opment reduced and development) new of costs fast-track include benefits compensatory is ul cmest fr oss associated losses for compensate fully cies different communities will need to adopt dif community.likelythatisreason, thisFor it vary also They community. to community developers allow benefits such that extent ifrn cmuiis n i different in and communitiesdifferent of market-ratehousing.of supply of market-rate homes. significantly over time, even within single a

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------The Effects of Inclusionary Zoning on Local Housing Markets: 12 Lessons from the San Francisco, Washington DC and Suburban Boston Areas Vandell, Kerry D. 2003. “Inclusionary Zoning: Myths and Realities,” Center for Urban Land Land Urban for CenterRealities,” and Myths Zoning: “Inclusionary 2003.D. Vandell,Kerry The Case for InclusionaryZoning Working paper. 2005. References Prices in Greater Boston.” Harvard University, Rappaport Institute for Greater Boston work BostonGreater forInstitute University, Boston.”GreaterHarvardRappaport in Prices Pioneer Institute for Public Policy Research and the Rappaport Institute for Greater Boston.Greater for Institute Rappaport the and ResearchPolicy Public forInstitute Pioneer oel Bnai ad dad tiga. 04. Huig upy n Affordability: and Supply “Housing 2004a. Stringham. Edward and Benjamin Powell, Powell, Benjamin and Edward Stringham. 2004b. “Do Affordable Housing Mandates Work? Mandates Housing Affordable “Do 2004b. Stringham. Edward and Benjamin Powell, etl osn Mre i Msahsts” e Yr: umn etr o Ra Ett and Estate Real for Center Furman York: New Massachusetts.” in Market Housing Rental Lessons from the WashingtonfromtheMetropolitan Lessons Area o, ahk ad aia oe 2003. Rose. Kalima and Radhika Fox, Edward Glaeser, Jenny Schuetz and Bryce Ward. 2005. “Regulation and the Rise of Housing of Rise the and“Regulation Ward.2005. Bryce and SchuetzGlaeser,JennyEdward Evidence from County and Orange County.” Los Angeles: Reason Public Policy Public Reason Angeles: County.” Los Orange and County Angeles Los from Evidence rw, ae Dsoe. 2001. Destorel. Karen Brown, aoo Vcoi ad io aaia 20. Plc Cam wt Wa Eiec: Critique A Evidence: Weak with Claims “Policy 2004. Calavita. Nico and Victoria Basolo, Economics Research at University of Wisconsin – Madison working paper. Do Affordable Housing Mandates Work?” Los Angeles: Reason Public Policy Institute, Institute, Policy Public Policy Reason Angeles: Los Mandates Work?” Affordable Housing Do ra Plc Wrig ae Sre. http://furmancenter.nyu.edu/publications/documents/ Series. Paper Working Policy Urban Non-Profit Housing Association of Northern California. 2007. California. Northern of Association Non-Profit Housing Institute, Policy Study No. 320 NorentersinmyBackyardcombined.pdf California Inclusionary Housing Programs tion_housingprices.pdf Calavita, Nico and Kenneth Grimes. 1998. “Inclusionary Housing in California: TheExperience California Coalition for Rural Housing and Non-Profit Housing Association of Northern of Association California. Housing 2003. Non-Profit and Housing Rural for Coalition California aiona olto fr ua Huig 2007. Housing. Rural for Coalition California n ppr http://www.ksg.harvard.edu/rappaport/downloads/housing_regulations/regula paper. ing Study No. 318. Schuetz, Jenny. 2007. “No Renters in My Suburban Backyard: Land Use Regulation and the and Regulation Use Land Backyard:Suburban My in Renters “NoJenny. 2007.Schuetz, http://calruralhousing.org/housing-toolbox/inclusionary-housing-policy-search. of Two Decades.” of Urban and Metropolitan Policy. f h Rao Fudto Suy n nlsoay osn i te a Facso a Area.” Bay Francisco San the in Housing Inclusionary on Study Foundation Reason the of Local Housing Regulation Database Inclusionary Housing in California: 30 Years of Innovation Journal of the American Planning Association . Oakland, PolicyLink CA: report. Expanding Affordable Housing Through Inclusionary Zoning: Inclusionary Through Housing Affordable Expanding . . Prepared by Amy Dain and Jenny Schuetz. xadn Huig potnt i Wsigo, DC: Washington, in Opportunity Housing Expanding . WashingtonBrookingsInstitutionCenterDC:. aiona nlsoay osn Database Housing Inclusionary California 64(2): 150-170. Affordable by Choice: Trends in Trends Choice: by Affordable . . - -

The Effects of Inclusionary Zoning on Local Housing Markets: 13 Lessons from the San Francisco, Washington DC and Suburban Boston Areas Vicki Been of the Furman Center for Real Estate and Urban Policy at New York University.York New at Policy Urban and Estate Real for Center Furman the of Been Vicki The study was commissioned by the Center for Housing Policy. The study benefited from benefited study The Policy. Housing for Center the by commissioned was and study Meltzer, The Rachel Schuetz, Jenny by conducted research on based is brief issue This Acknowledgements soito o Hm Bidr; ihr Gen Oie T Cr J. hi i Ra Ett and Estate Real in Chair Jr. Carr T. Oliver Green, Richard Builders; Home of Association Authored by Amy Armstrong, Vicki Been, Rachel Meltzer, Jenny Schuetz Planning University of Michigan; Jeffrey Lubell,Executive Director, Center for Housing Policy; Professor, Department of Planning, Policy and Design, University of California-Davis;Davidof University Design, andPolicy Planning, Professor,of Department Finance George Washington University; Jonathan Levine, Professor of Urban and Regional and Urban of Professor Levine, Jonathan University;Washington George Finance w.h.r/osn/z r tp/fracne.y.d/ulctosidxhm. l opin http://furmancenter.nyu.edu/publications/index.html. All or www.nhc.org/housing/iz the advice and review of a diverse advisory board, comprised of: Victoria Basolo, Associate Basolo, Victoria of: comprised board, advisory diverse a of review and advice the opee cnwegmns a b fud n h wrig ae dat aalbe nie at online available draft, paper working the in found be may acknowledgements Complete Crowe, Senior Staff Vice President for Federal Regulatory and Housing Policy, National Policy, Housing and Regulatory Federal for President Vice Staff Senior Crowe, ions, errors or omissions, however, are those of the Furman Center alone. The The and Kalima Rose, Senior Director, PolicyLink. viding objective academic and empirical research on the legal and public policy issues issues policy public and legal the on research empirical and academic objective viding More information on the Center isavailable www.nhc.org/housing/chp-index. at: ter has become the leading academic research center in New York dedicated City to pro - Graduate School of Public Service at NYU. GraduatePublicService of School Cen - Since founding its theFurman 1995, in F.Wagner Robert the and Law of School University York New the of center research ing Conference (NHC). In with partnership NHC and its members, the Center works to found at www.furmancenter.nyu.edu. involving land use, real estate, housing and urban affairs in the , with a with States, United the in affairs urban and housing estate, real use, land involving practical, real-world expertise, the Center helps to develop effective policy solutions policy effective develop to helps Center the expertise, real-world practical, particular focus on New York City. More information about the Furman Center can be be can YorkCenterNew on focusFurman City.the Moreabout particular information broaden understanding of the Nation’s housing challenges and to examine the impact the examine to and Nation’schallenges the housing of understanding broaden of policies and programs developed to address these needs. Combining research and research Combining needs. these address to developed programs and policies of at the national, state and local levels that increase the availability of affordable homes. of availability the increase that levels local andstate national, the at Fairbanks Ridge, ChelseaSan Diego,Investment CA, Corporation. Photo: Lynn Schmid. C F enter for urman C enter for enter H ousing Policy R eal E

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